M/S. ROYAL TOUCH FABLON PVT. LTD.,KOLKATA vs. JCIT, RANGE - 4, KOLKATA, KOLKATA

“For that the Ld. CIT(A) erred in confirming the disallowance of Rs.4,68,563/- under section 40(a)(i) for non deduction of tax at source on remittance of service charges to non-resident party when the said party did not have any permanent establishment in India, no income accrued or arose to the non-resident party in India and therefore the assessee was not liable to deduct tax at source.” 2. After hearing rival contentions, we find that the issue in question is covered in favour of the assessee and against the Revenue that the decision of Hon’ble “C” Bench of the Tribunal in the case of DCIT, Circle-11, Kolkata vs Bonie Apparels P.Ltd. in dated 06.09.2017. The assessee in this case appointed a foreign agent to collect foreign debt. The services in question were rendered by the agent outside India. The foreign agent does not have any permanent establishment in India. It filed a confirmation certificate, that it is located in Switzerland. In those

Year: 2011-12] circumstances, no income was arising in India, in the hands of the foreign agent. The issue is covered in favour of the assessee by the order of the ITAT, “C” Bench, Kolkata in in DCIT vs M/s Bonie Apparels (P.) Ltd. Dated 06.09.2018. The Hon’ble Supreme Court in the case of G.E.India Technology Centre P. Ltd. Vs CIT [2010] 327 ITR 456(SC), has held that “no tax should be deducted at source if there is no element of income chargeable to tax in the amount being remitted paid to party.” Ld.CIT(A) confirmed the addition on the wrong ground, that the assessee should proof the negative i.e. that it does not have the permanent establishment in India. In view of the above discussion, we allow this appeal of the assessee.

In the result, the appeal of the assessee is allowed.